I had a great talk with Revital from Payoneer, a relatively new player in the online payment market. Revital is a charming person, who describes Payoneer as an online prepaid solution. The company is a MasterCard issuer, and offers a neat payment service – sites can issue their own cards, send them to their suppliers and load them with money directly. The card is not connected to a bank account – and cardholders can use it as they wish until they run out of money.
Unlike PayPal, cardholders don’t need to cash a check, in some countries not an easy task. However, they do not see themselves as competitors to PayPal, rather as a co-existing solution.
The company has 20 employees, with development team in Israel and marketing arm in NY. It was founded two years ago by Yuval Tal and was initially funded by angels. They just received 4.5M$ from Greylock Capital.
I was mainly interested in how they can help media sites. First of all, their application is great for mass payment, and indeed Metacafe uses their solution in their producer program. They also have the ability to brand their cards, so, a user generated content sites can ship MasterCard to all top content creators, branded with the site logo etc. Also, their white label account page, where cardholders can check their balance online, provide another branding opportunity to Payoneer’s customers.
However, they do not have any solution in place for rights settlements – as they are only managing payments in and out of their customers account. So, a site with pay per view mechanism, have to separately calculate which content owner gets what, and then pay through Payoneer’s solution.
I was pretty much interested in what they perceive as their competitive advantage. They do not have any unique technology – their main development effort is their back office systems, which they see as as a competitive advantage. It is clear that getting the license from MasterCard isn’t a simple thing, but then again if a company would like to compete with them, it would likely come from the financial industry – therefore, this is not a real barrier of entry.
It seems to me that Payoneer has a bright future –especially if they verticalize their product. If they will offer the ultimate solution for content distributors, they will be able to create a strong market position. But in order to do that they have to commit for a specific segment. I hope that they will find the way to fend off competition, as their solution is refreshing in the online world.